March Proves to Be a Good Month for Consumers

James Picerno submits: Today’s update on consumer spending and income confirms what was already clear in Friday’s Q1 GDP report: the economy is rebounding. It’s debatable if the rebound has the wherewithal to roll on at a pace that’s sufficient to keep the economic engine humming. But for the moment, the numbers speak loud and clear. Disposable personal income (DPI) rose 0.3% in March, the Bureau of Economic Analysis reported this morning. That’s up from February’s flat performance and is the best monthly gain since last December. DPI is up 3.4% for the past 12 months. Spending fared even better. Personal consumption expenditures (PCE) jumped 0.6% in March, at the top of the trend in recent months and raising PCE by 4.5% over the year-earlier level.Complete Story »

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James Picerno submits: Disposable personal income (DPI) and personal consumption expenditures (PCE) increased in December, the Bureau of Economic Analysis reports. The update marks the sixth straight monthly rise in PCE and the third consecutive gain for DPI. In other words, if you’re looking for a reason to doubt the revival in consumer spending of late, you won't find it here.

James Picerno submits: The U.S. economy expanded at an annualized 2% in the third quarter, the Bureau of Economic Analysis reports. The rate of GDP increase for July through September is up slightly from Q2’s 1.7% pace, but still well below the 3.7% logged in this year’s first quarter or the robust 5.0% reading from last year’s final three-month stretch.

James Picerno submits: Personal income and spending rose in July, the Bureau of Economic Analysis reported today. By the deflated standards of late, that's good news. Indeed, disposable personal income (DPI) and personal consumption expenditures (PCE) gained 0.2% and 0.4%, respectively, vs. a flat performance in June. That's encouraging, as these things go in the summer of 2010.

Mainstream media headlines in the last two days offer an amusing look at GDP forecasts. GDP Stronger Than Expected Yesterday, the Financial Times reported US Rebound Stronger than First Thought. The US economy’s second quarter bounce was stronger than previously thought, with the official annualised growth estimate increased from 4 per cent to 4.2 per cent.

By James Picerno: The assumption by some economists that consumer spending and income is "rolling over" took a blow in Friday's February update from the Bureau of Economic Analysis. Disposable personal income (DPI) increased a respectable 1.1% last month while personal consumption expenditures (PCE) advanced 0.7% in February, or the most in five months.

The Bureau of Economic Analysis report on Personal Income and Outlays for January shows a 4% decline in real disposable income (the biggest drop in 20 years) following sharp gains in December. Personal Consumption Expenditures (PCE) eked out a .1% month-over-month gain.
Personal Income and Outlays, January 2013

Consumer Exchange-traded Funds’ Performances
Here's how Consumer ETFs performed on Friday:
Consumer Discretionary ETF (XLY): -1.41%
Consumer Staples ETF (XLP): -0.49%
Consumer stocks were down on Friday largely due to a few mixed earnings results in the sector as well as a drop in consumer sentiment data, while personal income and outlays increased by a lower-than-expected percentage. Investors should watch out for the monthly figure for US auto sales to be released today.

Consumer spending has been surprisingly resilient in the face of a sharp rise in taxes and, more recently, higher petrol prices. It rose 0.3% (after inflation) in both January and February, the government reported this morning, and looks likely to rise at a 3% annual rate in the first quarter, a major reason many first quarter GDP growth estimates now top 3%.

By James Picerno: Disposable personal income (DPI) in December surged by 2.7% compared with November's level, although the gain "was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates," the government advises.